Correlation Between Lian Hwa and Unitech Computer
Can any of the company-specific risk be diversified away by investing in both Lian Hwa and Unitech Computer at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lian Hwa and Unitech Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lian Hwa Foods and Unitech Computer Co, you can compare the effects of market volatilities on Lian Hwa and Unitech Computer and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lian Hwa with a short position of Unitech Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lian Hwa and Unitech Computer.
Diversification Opportunities for Lian Hwa and Unitech Computer
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lian and Unitech is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Lian Hwa Foods and Unitech Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unitech Computer and Lian Hwa is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lian Hwa Foods are associated (or correlated) with Unitech Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unitech Computer has no effect on the direction of Lian Hwa i.e., Lian Hwa and Unitech Computer go up and down completely randomly.
Pair Corralation between Lian Hwa and Unitech Computer
Assuming the 90 days trading horizon Lian Hwa Foods is expected to generate 1.46 times more return on investment than Unitech Computer. However, Lian Hwa is 1.46 times more volatile than Unitech Computer Co. It trades about 0.1 of its potential returns per unit of risk. Unitech Computer Co is currently generating about 0.04 per unit of risk. If you would invest 9,000 in Lian Hwa Foods on November 28, 2024 and sell it today you would earn a total of 7,800 from holding Lian Hwa Foods or generate 86.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
Lian Hwa Foods vs. Unitech Computer Co
Performance |
| Timeline |
| Lian Hwa Foods |
| Unitech Computer |
Lian Hwa and Unitech Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lian Hwa and Unitech Computer
The main advantage of trading using opposite Lian Hwa and Unitech Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lian Hwa position performs unexpectedly, Unitech Computer can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Unitech Computer will offset losses from the drop in Unitech Computer's long position.| Lian Hwa vs. Lien Hwa Industrial | Lian Hwa vs. Charoen Pokphand Enterprise | Lian Hwa vs. Great Wall Enterprise | Lian Hwa vs. Uni President Enterprises Corp |
| Unitech Computer vs. Tait Marketing Distribution | Unitech Computer vs. Newretail Co | Unitech Computer vs. Cowealth Medical Holding | Unitech Computer vs. First Copper Technology |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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